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The California Supreme Court ruled today that a group of local governments led by Santa Clara County can use private lawyers paid with contingency fees to pursue a 10-year-old lawsuit on lead-based paint.

The court issued its unanimous ruling in San Francisco regarding a lawsuit filed by the county in 2000 in Santa Clara County Superior Court against former makers of lead-based paint.

Nine other cities and counties, including San Francisco, Oakland and San Mateo, and Alameda, Solano and Monterey counties, later joined the case.

Lead-based paint was banned in residential buildings in the United States in 1978, but the public-nuisance lawsuit claims the manufacturers were aware of the health dangers, especially to children, and should be financially responsible for removing or containing lead-based paint remaining on buildings.

In order to handle the complex lawsuit, the cities and counties enlisted the help of private lawyers, who would be paid with a contingency fee of 17 percent of the proceeds if they won the case.

The local governments said in court papers that they probably wouldn’t be able to pursue the case without the aid of the private attorneys.

The paint makers, led by Atlantic Richfield Co., argued that the contingency arrangement shouldn’t be allowed because the private lawyers would have a conflict of interest in which they allegedly might be looking out for profit rather than the welfare of the public.

But the high court said that such arrangements could be permitted if there are safeguards of supervision and final decision-making power by public lawyers from the local governments.

Chief Justice Ronald George wrote, “Retention of private counsel on a contingent-fee basis is permissible in such cases if neutral, conflict-free government attorneys retain the power to control and supervise the litigation.”

Lawyers for the cities and counties said the ruling would enable them to go ahead with public-interest lawsuits they otherwise wouldn’t be able to afford to handle.

“This ruling is a major win for consumers because it gives public law offices like mine a fighting chance to take on powerful, well-funded wrongdoers like big tobacco and corporate polluters,” San Francisco City Attorney Dennis Herrera said.

Santa Clara County Counsel Miguel Marquez said the decision meant manufacturers would have to either successfully defend their “long history of misleading the public” about the dangers of lead-based paint on residences or pay to clean up the damage.

“This ruling tells all corporate actors that, at least in California, public officials can use private counsel to even the playing field to remedy environmental hazards and other harm to the public from corporate malfeasance,” Marquez added.

But a lawyer for Atlantic Richfield, which is now a subsidiary of BP, called the ruling troubling and contended the contingency arrangement violates the right of due process.

“Today’s ruling upends the fundamental legal principle that no attorney wielding the government’s police power may have a financial interest in the outcome,” attorney Philip Curtis said. “When contingency fee lawyers assume the government’s prosecutorial powers, they substitute a personal profit motive for the impartial judgment expected of government lawyers.”

The lawsuit names nine companies as defendants, including DuPont, Sherwin-Williams Co. and Con-Agra Grocery Products Co., as well as Atlantic-Richfield.

The ruling sends the case back to Santa Clara County Superior Court for further pretrial proceedings.

The paint companies contend their products were legal at the time they were made and say that landlords rather than paint makers should be sued over any remaining hazards.
If the case goes to trial, the financial stakes could be high.

In 2006, the state of Rhode Island won a public-nuisance verdict against three lead-based paint companies that was estimated to result in costs of up to $2.4 billion for abatement. But the Rhode Island Supreme Court overturned that judgment in 2008.

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Richard Rabin

In addition to causing lead paint poisoning, NL Industries and Eagle Picher (which went into bankruptcy from the asbestos lawsuits) also sold lead water pipes long after they were known to cause lead poisoning. (See Rabin R. “The Lead Industry and Lead Water Pipes: ‘A Modest Campaign,'” American Journal of Public Health 2008; 98:1584-1592)